Litecoin (LTC) has seen a surge in price today, reaching a two-week high, despite the overall underperformance of the cryptocurrency market. As of March 27, the price of LTC rose by 9.25% in the last 24 hours, while the broader crypto market was down by 1.15% during the same period. However, when looking at the year-to-date (YTD) timeframe, Litecoin has underperformed compared to the rest of the market.
One of the main reasons behind Litecoin’s price rally today is the absorption of a $60 million supply of LTC tokens by traders. These tokens were previously inactive and had not been circulated for at least five years. On March 5, more than 600,000 LTC tokens were reintroduced into circulation, resulting in the highest daily jump on record. Although the price of LTC fell by over 19% on the same day, it has since rebounded by 37.25%, indicating that the market has successfully absorbed the influx of previously dormant tokens. This price rally is part of that rebound. Interestingly, a similar trend occurred before Litecoin’s bull run in 2017.
Another factor contributing to the recent gains in LTC’s price is the potential launch of Coinbase’s cash-settled Litecoin futures contracts in April. Coinbase Derivatives filed an application with the U.S. Commodity Futures Trading Commission (CFTC) on March 7, targeting a launch date of April 1 for Litecoin futures contracts, as well as futures contracts for Dogecoin (DOGE) and Bitcoin Cash (BCH). The introduction of cash-settled Litecoin futures could attract institutional capital to the LTC market, similar to what happened after the launch of CME Bitcoin futures in 2017.
Additionally, Litecoin’s network health has been booming, which has also contributed to its recent gains. The hash rate of Litecoin reached a record high on March 22, indicating that miners have been allocating more computational power to mine and secure the Litecoin blockchain. This increase in hash rate reflects miners’ confidence in the profitability of cryptocurrency mining, especially as Bitcoin approaches its fourth halving in April. This optimism encourages traders to hold or buy LTC, thus driving up the price.
From a technical analysis perspective, Litecoin’s rally has gained momentum after breaking above its multi-year descending trendline resistance. Two key indicators suggest that LTC has the potential for further growth. The weekly Relative Strength Index (RSI) remains within the neutral range and is trending upward, while the increase in trading volumes alongside the price ascent indicates strong trader support for the upward movement. If bullish continuation occurs, LTC’s price could rise towards the 0.236 Fibonacci retracement line at around $127.25 by April, which is a 30% increase from current price levels. On the other hand, a retreat from the current price levels could lead to a retest of the descending trendline resistance at $75.50 as support.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.